A bank founded by one of the Labour Party’s biggest donors is battling a £1.5m High Court claim from a supplier over allegedly unpaid debts.
The Bank of London, which was launched by Labour donor Anthony Watson and counts Lord Mandelson among its board members, is being chased in the courts by a software group over allegations it owes hundreds of thousands of pounds for licensing a foreign exchange product.
SmartTrade Technologies claims the bank agreed a five-year deal but allegedly stopped paying instalments due from June 2023 and now has hundreds of thousands of pounds in unpaid debt, according to High Court documents.
The revelations come amid intense scrutiny of the Bank of London after a surprise winding-up petition – one of the most serious actions a creditor can take against a company – was filed against its holding company by HMRC earlier this month.
The Bank of London was forced to fend off the claim, which it blamed on a “simple administrative handling delay”. The petition has since been withdrawn.
Launched in 2021, the Bank of London has claimed to be only the second clearing bank to be launched in the City in 250 years.
The company has set out to use technology to reform the ageing systems used by banks to move money around the world, making it more efficient and cheaper. It has raised hundreds of millions of pounds and is valued at more than $1bn.
Among its board members are Lord Mandelson, a former business secretary; and Harvey Schwartz, the chief executive of private equity giant the Carlyle Group.
The bank was founded by Mr Watson, who has given around £500,000 to the Labour Party, including donations to Angela Eagle, Wes Streeting and Yvette Cooper, and won plaudits around the world for his work as an LGBT champion in the workplace.
The bank has also experienced a flurry of executive departures. Mr Watson announced earlier this month that he would be stepping aside as chief executive. “I know in my heart that this is the right time for me,” he said at the time.
Its chief markets officer, chief operating officer and chief information security officer have also exited this year, while two senior non-executive directors left towards the end of 2023.
In the latest lawsuit, SmartTrade accuses the Bank of London of withholding hundreds of thousands of pounds owed as part of a deal for its software.
The claims, first filed in May, allege that in “breach of that agreement, the defendant failed to pay that sum or any part thereof by the due date or at all”. The claimant is seeking £1.5m for the bills, interest and damages.
Earlier this month, the Bank of London said it had raised £42m from investors, including existing backer Mangrove Capital Partners, which the company has said it will use to expand in the UK.
Sources close to the bank have previously said it now has “years” of financial runway.
A Bank of London spokesman said: “This claim relates to a minor commercial dispute in respect of which we have a robust defence which we fully expect to succeed.”
SmartTrade Technologies did not respond to a request for comment.
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